Good morning! The market managed to pull up off the strong late day decline Tuesday afternoon, but the intraday trading was not as decisive as that of the prior day. Disappointing news from Microsoft Corp. (MSFT) with the delay of its launch of the new Vista operating system until next year weighed down the Nasdaq, while the Dow Jones Ind. Ave. continued to outperform. By the end of the session it went to far as to hit new highs once more on the year and closed up 81.96 points at 11,317.43. The S&P 500 gained 7.81 points to end the session at 1,305.04. The weaker Nasdaq Composite also closed higher at 2,303.35 with a gain of 9.12 points.

Coming out of the prior afternoon's decline, both the S&P 500 and Dow saw rounded action at lows on the 2-5 minute charts. The pace of the selling had slowed into the close and the indices continued to round off into Wednesday morning. Both the S&P 500 and Nasdaq formed small Phoenix patterns by pulling up off opening lows, basing for about 15 minutes on declining volume into 10:00 ET and then breaking higher at an increasing pace. This helped closed the morning gap on the Nasdaq and led to move into the 15 minute 20 sma resistance in the S&P 500 before the indices began to correct to the buying on the 5 minute charts. The Dow also hit resistance at this time with the 5 minute 200 sma.

The S&P 500 and Dow both corrected gradually from the resistance, falling into a sideways channel on the 5 minute charts. The S&P 500 formed a decent cup with handle on the 15 minute charts with the handle along the 15 minute 20 sma. This triggered just after 11:30 ET. The pace the breakout was not as strong as normal for this type of pattern however. It fell just short of putting in an equal move on the 5 minute charts and this indicated a slowdown of the correction off lows and increased the odds that the market would attempt to reverse into the afternoon.

The changing pace continued into the early afternoon when a third wave of buying in the S&P 500 and Dow was even slower than the second. The indices began to hug the 5 minute 20 sma support and the earlier indication of weakness coming in was confirmed as that support gave way into the 14:00 ET reversal period. The Nasdaq, which had the most difficult time moving higher throughout the morning, had the easiest downside move into 14:30 ET. As the initial support hit at the S&P and Dow's 15 minute 20 sma support, however, the market failed to base along the support for a continuation move coming out of the afternoon reversal. Instead they held and a small phoenix in the form of a 2 minute cup with handle led to a return to highs going into the last half hour of the day.

Initially I was expecting greater weakness for the remainder of the week. The way the market managed to claw its way back from Tuesday's selloff, nevertheless, was quite impressive. The pace is still stronger on the downside on the 15-30 minute charts, but the extent of the retracement off lows and increase in pace into the close lends more credibility towards continued range action on the Nasdaq and another move for new yearly highs on the S&P500.

Economic Reports and Events
Mar 23: Initial Claims 03/18 (8:30 am), Existing Home Sales for Feb. (10:00 am)
Mar 24: Durable Orders for Feb. (8:30 am), New Home Sales for Feb. (10:00 am)
Mar 27: -
Mar 28: -

Earnings Announcements of Interest
Only stocks with an average daily volume of 500K+ are listed. List may not be complete so be sure to always check your stock's earnings date before holding a position overnight. (A) = Earnings after the close, (B) = Earnings before the open, (?) = Earnings time not specified at the time of this writing
Mar 23: COMS (A), APOL (B), BGO (A), CCL (?), CAG (B), EGO (B), FDO (B), FINL (4:15 pm ET), FRED (B), GIS (B), POL (?), SLR (A), WTSLA (A)
Mar 24: -
Mar 27: WAG (?)
Mar 28: LEN (B), PAYX (A), RHAT (A), TIBX (A), TIF (B)
Note: All economic numbers and earnings reports are in lines with those compiled by Yahoo Finance. Occasionally changes will occur that are made after the posting of this column.

Toni Hansen is President and Co-founder of the Bastiat Group, Inc., and runs the popular Trading From Main Street. She can be reached at Toni@tradingfrommainstreet.com.